Finding the answers to most questions usually begins with measuring. But when it comes to answering questions that plague business and society – Will this new product succeed? Will that company fail? How valuable is a human life? – the usual tools of measurement fall short. Metrics expert Douglas W. Hubbard offers a logical, reasoned explanation of how to assign a dimension to anything, especially intangibles or “soft” issues. He makes a strong case for why failing to measure such issues can lead to unsatisfactory or even disastrous decisions. His straightforward approach to the sometimes off-putting field of statistics will appeal to even the most numerically challenged. getAbstract recommends his advice to anyone charged with making critical decisions.
Was this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.ChrisDyer
Posted Sat Sep 05 00:00:00 EDT 2009
This is a truly eye-opening book. I, too, once fell into the trap of thinking that certain things were simply not measurable. But this book has clearly pointed out the fallacy of that way of thinking. Anything can be measured if you understand that measurement is not always an exact figure but rather is a way of reducing uncertainty. This book explains these ideas very clearly and includes many tips and shortcuts to help you. I highly recommend this book.
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Posted Thu Aug 07 00:00:00 EDT 2008
Do you think the most important things can't be measured? Of course, they can, says Doug Hubbard. I picked this up as a skeptic and I have to say that Hubbard has completely addressed every reason I ever said something was 'immeasurable'. He carefully identifies, and then demolishes, every myth about measurement and its alleged impossibility in so many situations. I particularly liked his treatment of established methods for measuring uncertainty, risk, and the value of information. He even shows how various studies measured happiness and how much we value endangered species or our own safety - all by examining the choices we make. This is the only measurement book I've ever found worth recommending.
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More About This Textbook
Overview
Praise for the Second Edition of How to Measure Anything: Finding the Value of "Intangibles" in Business
"How to Measure Anything was already my favorite book (just ahead of Hubbard's second book, The Failure of Risk Management) and one I actively promote to my students and colleagues. But the Second Edition, improving on the already exquisite first edition, is an achievement of its own. As a physicist and economist, I applied these techniques in several fields for several years. For the first time, somebody wrote together all these concerns on one canvas that is at the same time accessible to a broad audience and applicable by specialists. This book is a must for students and experts in the field of analysis (in general) and decision-making."
—Dr. Johan Braet, University of Antwerp, Faculty of Applied Economics, Risk Management and Innovation
"Doug Hubbard's book is a marvelous tutorial on how to define sound metrics to justify and manage complex programs. It is a must-read for anyone concerned about mitigating the risks involved with capital planning, investment decisions, and program management."
—Jim Flyzik, former Government CIO, White House Technology Advisor and CIO magazine Hall of Fame Inductee
Praise for the first edition—The bestselling Business Math book two years in a row!
"I love this book. Douglas Hubbard helps us create a path to know the answer to almost any question, in business, in science, or in life . . . How to Measure Anything provides just the tools most of us need to measure anything better, to gain that insight, to make progress, and to succeed."
—Peter Tippett, PhD, MD, Chief Technology Officer, CyberTrust, and inventor, first antivirus software
"Interestingly written and full of case studies and rich examples, Hubbard's book is a valuable resource for those who routinely make decisions involving uncertainty. This book is readable and quite entertaining, and even those who consider themselves averse to statistics may find it highly approachable."
—Strategic Finance
"This book is remarkable in its range of measurement applications and its clarity of style. A must-read for every professional who has ever exclaimed, 'Sure, that concept is important, but can we measure it?'"
—Dr. Jack Stenner, cofounder and CEO of MetaMetrics, Inc.
"Hubbard has made a career of finding ways to measure things that other folks thought were immeasurable. Quality? The value of telecommuting? The benefits of greater IT security? Public image? He says it can be done—and without breaking the bank . . . If you'd like to fare better in the project-approval wars, take a look at this book."
—ComputerWorld
"I use this book as a primary reference for my measurement class at MIT. The students love it because it provides practical advice that can be applied to a variety of scenarios, from aerospace and defense, healthcare, politics, etc."
—Ricardo Valerdi, PhD, Lecturer, MIT
Related Subjects
Product Details
Meet the Author
DOUGLAS W. HUBBARD is the inventor of Applied Information Economics (AIE), a measurement methodology that has been used in IT portfolios, entertainment media, military logistics, R&D portfolios, and many more areas where big decisions are based on factors that seem difficult or impossible to measure. He is an internationally recognized expert in metrics, decision analysis, and risk management, and is a popular speaker at numerous conferences. He has written articles for InformationWeek, CIO Enterprise, Architecture Boston, Analytics and OR/MS Today and is also the author of The Failure of Risk Management: Why It's Broken and How to Fix It.
Table of Contents
Preface xi
Acknowledgments xv
SECTION I MEASUREMENT: THE SOLUTION EXISTS 1
CHAPTER 1 Intangibles and the Challenge 3
Yes, I Mean Anything 5
The Proposal 6
CHAPTER 2 An Intuitive Measurement Habit: Eratosthenes, Enrico, and Emily 9
How an Ancient Greek Measured the Size of Earth 10
Estimating: Be Like Fermi 11
Experiments: Not Just for Adults 13
Notes on What to Learn from Eratosthenes, Enrico, and Emily 18
CHAPTER 3 The Illusion of Intangibles: Why Immeasurables Aren't 21
The Concept of Measurement 22
The Object of Measurement 26
The Methods of Measurement 28
Economic Objections to Measurement 35
The Broader Objection to the Usefulness of "Statistics" 37
Ethical Objections to Measurement 39
Toward a Universal Approach to Measurement 41
SECTION II BEFORE YOU MEASURE 45
CHAPTER 4 Clarifying the Measurement Problem 47
Getting the Language Right: What "Uncertainty" and "Risk" Really Mean 49
Examples of Clarification: Lessons for Business from, of All Places, Government 51
CHAPTER 5 Calibrated Estimates: How Much Do You Know Now? 57
Calibration Exercise 59
Further Improvements on Calibration 64
Conceptual Obstacles to Calibration 65
The Effects of Calibration 71
CHAPTER 6 Measuring Risk through Modeling 79
How Not to Measure Risk 79
Real Risk Analysis: The Monte Carlo 81
An Example of the Monte Carlo Method and Risk 82
Tools and Other Resources for Monte Carlo Simulations 91
The Risk Paradox and the Need for Better Risk Analysis 93
CHAPTER 7 Measuring the Value of Information 99
The Chance of Being Wrong and the Cost of Being Wrong: Expected Opportunity Loss 100
The Value of Information for Ranges 103
The Imperfect World: The Value of Partial Uncertainty Reduction 107
The Epiphany Equation: How the Value of Information Changes Everything 110
Summarizing Uncertainty, Risk, and Information Value: The First Measurements 114
SECTION III MEASUREMENT METHODS 117
CHAPTER 8 The Transition: From What to Measure to How to Measure 119
Tools of Observation: Introduction to the Instrument of Measurement 120
Decomposition 124
Secondary Research: Assuming You Weren't the First to Measure It 127
The Basic Methods of Observation: If One Doesn't Work, Try the Next 128
Measure Just Enough 131
Consider the Error 132
Choose and Design the Instrument 136
CHAPTER 9 Sampling Reality: How Observing Some Things Tells Us about All Things 139
Building an Intuition for Random Sampling: The Jelly Bean Example 141
A Little about Little Samples: A Beer Brewer's Approach 142
Statistical Significance: A Matter of Degree 145
When Outliers Matter Most 148
The Easiest Sample Statistics Ever 150
A Biased Sample of Sampling Methods 153
Measure to the Threshold 162
Experiment 165
Seeing Relationships in the Data: An Introduction to Regression Modeling 169
One Thing We Haven't Discussed—and Why 174
CHAPTER 10 Bayes: Adding to What You Know Now 177
Simple Bayesian Statistics 178
Using Your Natural Bayesian Instinct 181
Heterogeneous Benchmarking: A "Brand Damage" Application 187
Bayesian Inversion for Ranges: An Overview 190
Bayesian Inversion for Ranges: The Details 193
The Lessons of Bayes 196
SECTION IV BEYOND THE BASICS 201
CHAPTER 11 Preference and Attitudes: The Softer Side of Measurement 203
Observing Opinions, Values, and the Pursuit of Happiness 203
A Willingness to Pay: Measuring Value via Trade-offs 207
Putting It All on the Line: Quantifying Risk Tolerance 211
Quantifying Subjective Trade-offs: Dealing with Multiple Conflicting Preferences 214
Keeping the Big Picture in Mind: Profit Maximization versus Purely Subjective Trade-offs 218
CHAPTER 12 The Ultimate Measurement Instrument: Human Judges 221
Homo absurdus: The Weird Reasons behind Our Decisions 222
Getting Organized: A Performance Evaluation Example 227
Surprisingly Simple Linear Models 228
How to Standardize Any Evaluation: Rasch Models 230
Removing Human Inconsistency: The Lens Model 234
Panacea or Placebo?: Questionable Methods of Measurement 238
Comparing the Methods 246
CHAPTER 13 New Measurement Instruments for Management 251
The Twenty-First-Century Tracker: Keeping Tabs with Technology 251
Measuring the World: The Internet as an Instrument 254
Prediction Markets: A Dynamic Aggregation of Opinions 257
CHAPTER 14 A Universal Measurement Method: Applied Information Economics 265
Bringing the Pieces Together 266
Case: The Value of the System that Monitors Your Drinking Water 270
Case: Forecasting Fuel for the Marine Corps 275
Ideas for Getting Started: A Few Final Examples 281
Summarizing the Philosophy 287
APPENDIX Calibration Tests (and Their Answers) 289
Index 299